Saturday, September 24, 2011

Dude, Let's Get Some Food...


It appears encouraging so far. In addition to flatlining price action on the daily charts, we have closed above 50% daily Fib levels in a convincingly bullish manner with the exception of CENX, which remains strangely bearish. If you look at the daily charts of BAC, BCS, JRCC, and TGB, the charts all appear very similar... something like this TGB daily chart:




Daily 50% Fib levels:

BAC $6.23 | closed 8 cents above
BCS $8.86 | closed 12 cents above
CENX $9.195 | closed 2.5 cent below
JRCC $7.075 | closed 10.925 cent above
TGB $2.795 | closed 9.5 cents above

This appears to be some form of profit-taking on the bears' part. Laugh all you want, but usually, the way I average in is when my losses get to about 50% of my original entry. I find that if I average in when my loss is 'only' 25%, I need to risk more capital than I'd like and the volatility sometimes works against me, resulting in the need to average in a third time. Mind you, most of the stocks I trade are high beta, so lower beta stocks may react differently. With BAC, I definitely have averaged in too many times already at all the wrong prices. Whatever it is, I was clearly doing something wrong.

I'm thinking Fib level percentages may be key to successfully averaging into positions, but there's still something I'm not grasping, Professor. I'm going to switch vantage points and look at it this way. Suppose we target the 50% Fib level on the 5-day chart as resistance. Using JRCC, which is my worst loser, this level will be about $8.25. Using today's close of $7.18, this is a $1.07 per share gain. Now, I'm going to research a stock that might move this amount or greater over the next few days that'll allow me to buy double the amount of shares as JRCC and I'm going to buy it.

+2.57% SBA
+1.56% Roth IRA

+0.35% DJIA
+1.12% Nasdaq
+0.61% S&P

The signs are there. Nasdaq is running faster than the rest of the crowd already. So ideally, my next play will be from Nasdaq. Which one will it be?



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